« Back to more Point of View stories

Investing 101: How to Get Started

If you’ve been thinking about investing, but aren’t sure what steps to take, start here. Justin Sullivan answers common questions you need to know before you start investing.

PNC’s Point of View editors asked Justin Sullivan, Certified Financial Planner® and investment market manager, southeast, with PNC Wealth Management® how the average person can start investing. Here’s what he had to say:

POV: If you want to start investing, how do you know when it’s the right time?

Sullivan: It all starts with budgeting. Investing essentially means putting your money at risk with the hope of a greater return, so you need to make sure you have money available for everyday living expenses and you have an emergency fund. You’re not ready if you’re living paycheck to paycheck or couldn’t handle an unexpected $200 expense. You should hold off on investing until you have a better safety net.

Once your emergency savings is enough to cover three-to-six months’ worth of your everyday expenses, then that’s a good time to start investing. You can put some assets at risk without putting your everyday financial security at stake.

Justin Sullivan

A lot of times it’s easiest to start through a workplace 401(k) plan. If your employer matches your contributions, that’s a good baseline of how much of your salary to start deferring to the plan.

Again, while it’s convenient to invest through a workplace 401(k) plan, it doesn’t make sense to invest if you’re living paycheck to paycheck – so if you’re serious about getting started, you’ll need to consider making changes to your budget so that you can prioritize investing for your future.

POV: Is there a minimum amount to start investing?

Sullivan: There is no minimum required to start investing on your own. The most important part is to start and to be consistent. Set up regular deposits into your investment account - maybe once every paycheck, once a month or once a quarter.

POV: How do you start investing?

Sullivan: Most people who are new to investing have limited resources. It’s best to look into mutual funds and exchange-traded funds (ETFs), which will instantly give you diversification instead of choosing one or two stocks. You don’t want to put all your proverbial eggs in one basket.

POV: If you want to invest in stocks, how do you choose them?

Sullivan: Thanks to the internet, there are many resources out there. A quick Google search on a company you’re interested in can provide a lot of detail. Even financial podcasts, TV shows or radio programs can provide a lot of information; however, to successfully invest in stocks, you need to be able to analyze financial statements and have quantitative expertise. For this reason, investing in mutual funds is an ideal starting point: it allows you to invest in stocks while leaving the heavy lifting of research to the experts managing the fund.

POV: Are there some stocks that are better to invest in early on?

Sullivan: Your investment time horizon, or how long you plan to invest the money before you cash out, is one of the most critical components of investing. If you have a lot of time before you need the money – i.e. you have decades to go before retirement – then it makes sense to invest in assets that have a higher propensity for growth. You can take on more risk because you have more time to go through market ups and downs in order to get greater returns.

Companies labeled as growth stocks, like those in the information technology sector, would be appropriate for someone who has many years before they need the funds– as long as your risk tolerance is high enough to withstand some ups and downs over time.

African American man wearing work clothing sitting at a desk using a laptop to review investments

POV: How do you know when to sell or buy?

Sullivan: At the outset, don’t think about a specific number at which you want to buy or sell a stock. Instead, decide on your goals. Periodically review your portfolio to make sure that the investments are keeping you on track to meet those goals. If they are not, then it might make sense to consider buying or selling.

As a new investor, don’t focus on market timing, and don’t chase returns. Not only is it pretty much impossible to time the market, but you need to factor in taxes and trading costs associated with constantly moving in and out of positions. Most investors are rewarded for holding investments long-term and not getting seduced by the idea of a quick purchase or sale.

POV: How much should you monitor your account after you've started investing?

Sullivan: I would recommend quarterly reviews. If you’re investing in companies, they’re reporting earnings on a quarterly basis. As an investor focused on fundamentals, a quarterly review timed with earnings season makes a lot of sense.

On quarterly earnings, new investors should watch general trends. For example, what percentage of companies have been profitable and how much have they earned relative to what industry experts expected?  One red flag to be mindful of is how companies manage to be profitable for the quarter and whether or not that cause is sustainable. Were the profits made by selling more products and generating revenue? Or did they make a profit because they cut expenses by laying off employees? Just because a company has a good quarter doesn’t mean you should instantly buy their stock.

POV: If you aren’t comfortable managing investments on your own, who can help?

Sullivan: You can start by asking your bank if they have investment professionals or search for advisors in your area. Hiring an investment professional can help in so many different ways. Not only because of the experience and knowledge they bring to the table, but also the psychological aspect of it. You want someone who can remain calm when markets become turbulent. You may be tempted to sell when the market is volatile or uncertain, while an investment advisor can help you make a smart decision. It’s important to have someone to bounce ideas off of instead of going at it alone.


Learn how to choose the best financial advisor for your needs »

Justin Sullivan headshot
Justin Sullivan is a Certified Financial Planner® and investment market manager with PNC Wealth Management®

Before adding an investment to your portfolio, review these four characteristics:

  1. Risk/return profile
  2. Fees
  3. Liquidity
  4. Tax efficiency

PNC Point of View
Real People. Real Perspective. Real Insights.
Read more POV Stories »

Important Legal Disclosures and Information

These articles are for general information purposes only and are not intended to provide legal, tax, accounting or financial advice. PNC urges its customers to do independent research and to consult with financial and legal professionals before making any financial decisions.

This site may provide reference to Internet sites as a convenience to our readers. While PNC endeavors to provide resources that are reputable and safe, we cannot be held responsible for the information, products or services obtained on such sites and will not be liable for any damages arising from your access to such sites. The content, accuracy, opinions expressed and links provided by these resources are not investigated, verified, monitored or endorsed by PNC.

The material presented herein is of a general nature and does not constitute the provision by PNC of investment, legal, tax, or accounting advice to any person, or a recommendation to buy or sell any security or adopt any investment strategy. Opinions expressed herein are subject to change without notice. The information was obtained from sources deemed reliable. Such information is not guaranteed as to its accuracy.

The PNC Financial Services Group, Inc. (“PNC”) uses the marketing names PNC Wealth Management® and Hawthorn, PNC Family Wealth® to provide investment consulting and wealth management, fiduciary services, FDIC-insured banking products and services, and lending of funds to individual clients through PNC Bank, National Association (“PNC Bank”), which is a Member FDIC, and to provide specific fiduciary and agency services through PNC Delaware Trust Company or PNC Ohio Trust Company. PNC uses the marketing name PNC Institutional Asset Management® for the various discretionary and non-discretionary institutional investment, trustee, custody, consulting, and related services provided by PNC Bank, and investment management activities conducted by PNC Capital Advisors, LLC, an SEC-registered investment adviser and wholly-owned subsidiary of PNC Bank. PNC uses the marketing names Retirement 1-on-1SM and PNC Financial Wellness Achievement CenterSM for employee education services provided by PNC Bank. PNC does not provide legal, tax, or accounting advice unless, with respect to tax advice, PNC Bank has entered into a written tax services agreement. PNC Bank is not registered as a municipal advisor under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Investments: Not FDIC Insured. No Bank Guarantee. May Lose Value.

“PNC Wealth Management,” “Hawthorn, PNC Family Wealth,” and “PNC Institutional Asset Management” are registered marks, and “Retirement 1-on-1” and “PNC Financial Wellness Achievement Center” are service marks, of The PNC Financial Services Group, Inc.

©2019 The PNC Financial Services Group, Inc. All rights reserved.

Read a summary of privacy rights for California residents which outlines the types of information we collect, and how and why we use that information.